Planet42 gets R300m funding from Standard

Car subscription service Planet42 has received R300m in new funding from Standard Bank, the company said on Monday.

The funding consists of R50m in equity and a R250m credit facility, which the Naspers-backed company says will allow it to buy more cars and build on the more than 20,000 vehicles it has provided to customers in recent years.

Founded in 2017, Planet42 aims to address transport inequality by offering an inclusive car subscription service to customers who typically cannot access traditional bank credit. In emerging markets, including SA, vehicle finance — and therefore vehicle ownership — is out of reach for most low- and middleincome earners.

This new funding adds to Planet42’s sizeable funding efforts to date. The company raised a combined equity and debt round of $100m (R1.87bn) in 2023.

That round saw Naspers ’ s now defunct SA-focused venture arm co-lead a $15m equity funding round for the start-up with ARS Holdings. US-based asset manager Rivonia Road Capital provided a $75m credit facility, with private investors contributing a further $10m in debt financing.

The latest facility from Standard Bank is the first that the group has secured in local currency.

“Having the largest banking group in Africa partnering with SA’s pioneering car subscription company demonstrates our joint belief in this new model of mobility,” said Eerik Oja, CEO and co-founder of Planet42.

“Lack of access to a personal vehicle not only hinders economic opportunities but can also lead to a lower standard of living and contribute to ongoing structural inequality. Having access to a personal vehicle fosters financial inclusion and economic empowerment, paving the way for a brighter and more accessible future for every South African.”

The company — which also counts Change Ventures and Startup Wise Guys as investors

— is competing in a growing market that has seen the emergence of other local start-ups such as FlexClub, which has received much attention from investors.

These companies use a subscription model to give people access to vehicles. This could be seen as a form of long-term rental as lease periods typically go beyond the short one-day or one-week periods rental companies Avis and Hertz specialise in. Amounts paid for such arrangements also tend to be cheaper than the cost of financing a vehicle.

In late 2023 Avis entered the car subscription market with its iLease product.

According to Slade Thompson, GM of sales and marketing at Kinto One SA, the rise of subscription vehicles speaks to broader industry trends and changing consumer behaviour.

“Our journey in SA mirrors the growing demand for flexible and hassle-free mobility solutions. With consumers and businesses alike seeking accessibility, affordability, and convenience, subscription vehicles have swiftly gained momentum.”

Kinto One, a subsidiary of Toyota, is a car subscription operator that has 2,000 cars on SA roads.

HAVING ACCESS TO A PERSONAL VEHICLE FOSTERS FINANCIAL INCLUSION AND ECONOMIC EMPOWERMENT

Eerik Oja CEO and co-founder of Planet42

“This model disrupted the traditional ownership model by offering a comprehensive package that included the vehicle, insurance, maintenance, and roadside assistance, all bundled into a single, transparent monthly payment,” Thompson said.

Planet42 has developed credit scoring algorithms, which it uses to bridge the lending gap, using a wider range of data sources than traditional credit scores to assess risk. These algorithms determine a “suitable budget” for each customer and, based on this, subscribers can choose any new or pre-owned car, the company said.

Through a network of more than 1,000 local car dealerships, Planet42 buys the car and rents it out to the customer on a subscription basis, with customers being able to either buy or return the car at any time.

Recently, the company launched its first car marketplace at Menlyn Park Shopping Centre in Pretoria. This physical shop “not only extends Planet42’s reach but also complements its online platform”, offering customers a tangible experience when shopping for and choosing a vehicle. Since its launch, nearly 2,000 customers have taken delivery of a subscription car from the Menlyn location.

In 2021, Planet42 has raised $30m — $6m in equity and $24m in debt financing.